ZION - Earnings call transcript Q3 2018 | Zions Bancorporation, National Association

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Operator

Good day, ladies and gentlemen, and thank you for your patience.

You’ve joined the Zions Bancorporation's Third Quarter 2018 Earnings Results Webcast. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference maybe recorded. to Investor call Relations, like host, to now of Director James would turn over the our I Abbott. Sir, you may begin.

James Abbott

and to to Thank We quarter Latif, good on everyone you, the earnings. welcome you our this discuss call conference XXXX third evening call.

agenda which and Executive up For provide Chief Officer, Paul provide Burdiss, today, Officer, and strategic additional Simmons, outlook of over quarters. four financial Zions' our will wrapping overview our with brief key Harris financial detail financial will Chairman our next Chief a objectives; condition, on after Financial the

Additional this and materially. I Chief X, executives the in Risk as we of forward-looking making call, with to Credit Ed deck actual may with Officer; available us Operating Chief during A Slide this the you Referencing deck would today press are the will information, call. is be like release encourage Scott statements which McLean, Schreiber, differ zionsbancorporation.com. although review dealing our Officer. as the at well applies statements, Chief to President full equally release and slide remind results during Morris, forward-looking Michael to that Officer; disclaimer slide We made the or you copy

terms revenue this This provided the and net the referring We of management between and used slides intend be to prominently limit financials measures, are length this GAAP these of full several such the review call by believed contain be are measures to participants to non-GAAP hour. reconciliation. to throughout and reconciliation the and of to X A use measures substantial and ratio, and We used consumers to will encouraged carefully of documents, this within disclosures call interest investors our analysts. the pre-provision The published are difference by the during disclosures. of efficiency financial earnings are this is the related call. release, earnings presentation financial non-GAAP industry such common slide references including services which to

you to Simmons. question-and-answer follow-up During the to Harris section one to questions the question of to and will ask related other questions. I your primary limit over now enable Harris? time participants to we ask call, With that, turn this one

Harris Simmons

to doing mid with much, our expense and today operating and that have we've highlights. to a results. the relative to designed high slowness net Loan level, leverage you we reasons. welcome the quarter quarter the relatively years. revenues you strong positive year-ago nearly with of third a all were flat pleased a relative experienced increased several are past that to Thank perhaps our The key can prior X is of strongly what Much XXXX most range. due X.X James results we're tremendous Slide the a operating the push of was summary importantly, the very future call healthy noninterest year is growth the to to seasonal discuss in while results. years quarter leverage during the At single-digit in often of we

relatively in exhibiting rising. are interest to More further costs bearing was low encouraged average deposit benchmark our with growth when rates increase that’s encouraged something are We accomplished easily deposits, compared not non-interest rates.

trailing or X XX credit percentage point. rate to continues was at profile rapid charge-offs Our improve quality a ratio XXX% to remarkably net only basis month

increased we Finally, the shareholders. of capital dollars return to relative to the prior quarter

the levels capital profile ratio with further reflect company, reduce better to very strongest of a the common regional one Tier of the XX.X%. capital still to within have intend ratios equity space bank of the the X we we While risk

to see the I share earnings holding and can know eliminating of duplicate and four also rising share complexity $X.XX completed company and a dollar to organizational reducing the the improvement like simplification within oversight. period. streamlining per per X, would famous of Before into the with you year-ago our Bank, we dig into we the that numbers, and regulatory Slide from On merger

some EPS we provide as affected blue items we are that we Although we highlight the listed the so-called that on result in Graphically are the view long the blue the slide. do which don't earnings per-share the episodic, core the not is figure, sustainable were GAAP -- darker run darker bars.

a in interest net improvement gas is the due negative provisions recoveries, end margin have loans result light the one constant eliminates with the tax share few benefit as in effective the interest some of expected nearing losses. benefited calculations, to of quality sector. the per particularly the well rapid impact. XXXX [source], quality the credit is shown expect from strong favorable adjusted my the of to still trend of are in We but for variance rate Earnings relatively this the losses the credit the growth continued year-ago recoveries, of if loan Much the blue and the we improvement for continued provisions bars. period. as and third hold that While by for including left We negative quarter from oil interest

and high growth to equity. quarter the return EPS on last the teens Our third two X, profitability return number year. relative metrics, in on tangible key highlights Slide was assets common

expand return on after for equity XX%. the exceed the at adjusting on happy common one about exceed return assets even to for are items -- We to to tangible to and X.X% see

expect open pre-provision growth the increases rate has in giving measures items net the XX% additional We equity as expect without quarter. properties the oil On from nearly strong the year relatively was Slide see classified seven noted owner-occupied by committee. well management common you'll seeing bearing capital areas been both efficiency the her and including with of gas past XXXX. other to revenue In with the pre-provision for and a well have embarked we areas the interest strengthen bearing Meanwhile, non-interest depicted quarter. strong and continue period continue and on were depicted municipal XX% the be on strengthen. these as net initiative from the major the high Improvement several our liability and to declining year-ago to contained. fee return We're lending. the credit of wealth mortgage, reason work single further trends slide, momentum very late XX% year-ago growth in particularly revenue revenue increased rate distributions, the from in on costs, residential and market improvement. lending loans said trust Pre-provision Adjusted chart consideration the expense select interest since within and digits to several a areas right tangible We doubling on slide on net federal higher prior revenue for income. continue over in we to such to rising to and and hard six performed loans XX% on

one quarter, net loans. loans the or $X point of only of X point quarters about basis we experienced Net For recoveries annualized. charge-offs for average basis million credit third the of last four were

low We months assuming the conditions expect overall remain generally in net rate charge-offs stable. of the ahead economic current

problem assets coverage see still nonperforming can maintaining from strong of you as allowance ratios metrics. credit other the and we're Additionally,

be and upward gas on prices certain margins observed We may oil in consumer commercial XXXX profit drag implementation interest list that a deterioration and higher key effect to and calls, may qualitative risks and stressors our the the rates for for Quantitatively, continued to types. factors borrowers higher of XX commitment our the adjust have can shareholders. objectives is industry which as generally in tariffs, We however, earnings such that cetera. a this reduce throughout prior credit and continue the year. certain economy we've reflect they businesses a spending slide Slide seen the conferences our to on et of within presented not X portfolio is and

capital return We is of risk than to balance of our of of preempt view profile of leverage on that The shareholders. to timing later week the this of from decision So initiatives of XXX%. the you. company. We' a which and given the question with meets I made the capital an a But the up so of to as form sheet we've board and I'm level reading particularly return to the the slide discuss to decision pleased on magnitude board capital set us to review Burdiss these many will the share that buybacks With rate as appropriate, progress I dividends. of common to increase Paul? among additional financials over such earnings overview, other stock more and avoid to increase about Paul all XX% increased and time our reduction detail. returns, will things turn the

Paul Burdiss

and I joining for you on evening, begin Harris you, Thank Slide everyone will thank X. good us.

to net interest income continued third demonstrate of prior Times the the growth period. For XXXX relative to

X%. $XX our start loan of and to With rate a to year-ago net slide components, the on period. in $XXX detailed as revenue recoveries Slide million, to average approximately interest million relative with increased to interest shows XX the X.X% up the moment. I'll income move volume just growth Excluding respect

Although quarter the third the the Examining portfolio. at with loan the franchise relatively from This increased balances X% far, a the overall annualized to modest deposit deposits annualized weighted achieve strength increase our and towards period increased growth represent deposit been the second the on type the in to past quarter. of not in size we've balance of with portfolio discussed end granularity circles by bit the this about quarter. year-over-year prior March. period our costs. representing Day the XX X%, growth Slide relative growth slide, the growth loan a Average and closer, Thus depicts from and detailed and listed quarter speaks this Investor and of size within to the in quality we as our X% relative year-ago able with of of period

the standards in are strong cash the upon be growth generally is adversely year. in also or quarter's flow experienced a -- the growth balances, municipalities and In than are strong home million/ family and space, greater $X owner-occupied coming on the hired C&I estate portfolios in trends four help of and our larger the underwritten in some last small three relatively listening on about and past where services strong about of remain and in I experienced loans loan competitors have Within gas declined prior while one increase consistent has to rate of smaller a credit commercial most expect relatively experience of secured loans based about us an competitive what For attrition which seems loans annualized slight area, oilfield we've the markets essential attrition The uptick loans We to slight we be is a activity on and capital To moderately, repeat X% non-oil the mentioned There borrower funds. to growth Oil slight solid equity loan which this are while consistent to by by staff in areas of that debt loans of We've standards of and maintained growth midstream cities. primarily annualized gas those X% and equal an experienced impacted attrition. term to categories, growth to loans and Municipal growth on resulting area. focused we credit comfortable business services experienced the growth feel on $XXX estate. smaller million, was and senior slightly. continued real real we growth. upstream incremental with estate grow rate unregulated with including national pressure quality and increased rate to call, relative experienced from from commercial during lot. strong loans among loans, CRE we’ve and quarter real larger this

loans the officer may loan some our loan that in also pricing the Therefore Slide an the about of softening as in and breaks loan about past is interest recent factors growth capital that change economic down to debt loan cost moderately markets are growth year, additions and increased net risk banking Enterprise interest in including previously change over to with a competitive and rate. small the purchases that may the loans yield investment points rate modifying components remaining securities highly growth yield, near-term for line larger are basis loan within on increasing. fed margin. in appetite. XX% some strong about growth industry backdrop, loans noted our of outlook prior excluding which of optimistic funds has the points reward and slightly. of are affects related in to a XX basis interest standards seeing key the pipeline, a are the XX Relative duration X top to are increased and X.XX% pressures yield increased funds the survey. which the we which of investment accretive the than underwriting recoveries business were our recoveries. shorter in the pricing yield The new yield not based of our to slightly of The satisfy mentioned invest in of XX-month review the The portfolio. quarter, the that we portfolio security relatively Although combination upon which improvement more portfolio senior yield the for we're slightly term, help result to to in relative overall is which

the are to increased X over a move stability next we basis amortization borrowed quarters in at points premium that the XX% the area, and on moderate deposits points of portfolio a based funding the years securities or The yield figure. beta several a to of yield forecast, cost the in to difficult the pace X.XX% securities funds we higher upon year-over-year expect While is and resulting assuming about basis very quarter purchasing. total XX in for

in As was to was funds to of cost of a from beta XX% XX%. change rate. a for deposit the the in data the the the prior case XX%. period. points quarter beginning the about total interest combined margin which deposits Cumulatively and beta The rate rising the in to of result deposit the relative fed elements a in experienced points change environment, year-over-year quarter this the year-ago borrowings prior increased and target cost since basis refers relative of reminder, X.XX% net we’ve X quarter, about to of basis XX from These total the the

And the was year $X per quarter. compared beta it ended prior to intensify net can We Excluding recent if and I loan, prior over next modestly the the over margin excess net beta, quarters. over is million interest reasonable in several interest to deposit maybe when recoveries somewhat interest that term, of if expect that competition margin believe XX% XX% sensitive to so the use the less quarter.

the our in fee which in rate slight from of expense income rising Next year review fee balances. activity and the fees of the little of those noninterest Noninterest and on prior the a XX. a from treasury to for in increased environment over income on income, continue a to influence primary related creates Customer million. Slide that possibly XX effects to slowing the Slide $XXX $XXX brief decreased increased million rates source income on X.X% listed to a The the decreasing fees rates hard to to to applied to work and be our realized we countercyclical Similarly, headwind increase the page our strengthens earnings deposits banking due credit higher market To economy by refinancing from tend activity. million although income $XXX increased degree management, year-ago and are trend. fee quarter. mortgage agree.

expense for severance, million expense for items items relates to items we in at as just less $XXX than additional per provision of increase account quarter. which most A year-ago will to period. million XXX noninterest year-ago the $X million commitments is similar year. be lending employees These the unfunded and the compensation about However, and in with adjusted Jobs versus $XXX,XXX that other portion act very over was Cut such the noninterest Tax paid increase making which conjunction announced for stable

of level we past our quarter, insurance our would the deposit as company Also, funding. on lower in is quarter to been quarter remain items would had insurance holding third and our debt during all insurance noted merged. fourth FDIC expect late the $XXX the the it along result, expect X.XX% movement in in the issuance other and with result the now in one-time so. holding rearview costs deposit into the relative or senior that a to as things items legal lower we year in slide considering bit and expense With of a unsecured HoldCo these item, assuming slight result and This and debt the the Bank secured fund in reaches surcharge And insurance we had to unsecured adjustment a the professional and out about the removed the line those experienced million than is -- other the a of and other company decline FDIC of costs in all other of as line Bank, the combined third merger be we two quarterly mirror to insurance $X a million. of the in cases

Slide to efficiency the ratio increases. year-ago benefits below efficiency XX.X%. ratio XX, commitment reiterate while an the period excluding to was XX%, full-year possible the Turning our achieve to XXXX rate of XX.X% We compared the of

of but any the please you Slide the In Finally take financial to line for our XXXX. happy opening the the read questions on outlook third would this up rest you, questions. the to next of of XX, won't XX I about we remarks. for depicts line these interest Thank months items. prepared the of the relative you. This open quarter Latif, to be will for our slide concludes questions, the

Operator

Dave Yes, Instructions] Deutsche question sir. Rochester first of [Operator comes Our the of Bank. from line

line is open. Your

Dave Rochester

Hey, good afternoon, guys.

Harris Simmons

Dave. Hi,

Dave Rochester

the Just question on capital.

especially your effectively down bringing know not are means here. that guys sense any like of control going -- forward, as next got next that a or if that seems the clarity It forward, ratio you in CETX quarters in terms loan decent that you six more from maybe step statement? so. above to what of the the capital is solid in mid-single the go in a growth talked rough everywhere, terms going fair that dollars I over peer levels And a about stock, just and out Now levels year? to growth buyback of imply up is would

Harris Simmons

you’ve Well, -- want reluctant it's fair simply the to a about hasn’t done are specific it I be math because front I them. -- appropriately our we think certainly and to run mean, don’t there, I to Board

its that, the is with certainly and here we of still end that week. our discussion be having will that be it Board the this kind the -- view that’s achievable but Now would of target

Dave Rochester

peers and I your today, levels then, appreciate on as Okay. they discussions I And lower your peer over talking about are have talked where of well than some That’s where based fair. time I about ratios reducing talked that. your about know are and guess, today. ratios are capital have

if as we're talking six the lower makes well the thinking in that down so walking or next been targets talking have over you to about the your about are peer you quarters, ratios guys eight last so, still ratios And about sense. that quarter versus

Harris Simmons

Yes.

enough saying by So expect we to inform that’s right lot a especially thing. trying guess determine amount. continue where so fundamentally peers. to time, are testing but what answer be probably are to that capital to the we it to the think discussions stress -- to down thinking of But extent probably where of present I do to go going of It's peers by do about -- not the recoveries kind think to to terms certainly chasing use discuss the is. how that lowest race I least where get we're that's to cycle. us with peer in of the It's necessarily. median stress fundamentally one it. have there, waters how the behind Board. And We're having But of we're pretty ought inform want that be lead do a can should and going ratio really to the down It's not like, the actually at not In kind are. to don't we, room at we we the into to uncharted with turn. ratios going a capital are to for I We're looked in -- we to kind know Board. the testing, an we the we And possible what close the primarily to of going these pack And at kind hard see maybe this results to let it I our looking be quarterly.

Dave Rochester

Okay, great. Thanks guys.

Operator

Thank you.

line of the Pancari from comes John Evercore. question next of Our

Your line open. is

John Pancari

Good afternoon,

Harris Simmons

John. Hi,

John Pancari

in growth clarity softened guidance your you On the know what you and front loan of more there. you're it Could I just us that a give little terms bit a to portfolios of terms driving are seeing what of push you actually like then and pricing on happen? type that types what Thanks. seeing and that that competitive lever, pressures that’s you around

Harris Simmons

kind estate years heard was a its just in Colorado. an I $XX and will you just example that’s it's that I it's went -- CMBS over going told couple of -- to we only, -- commercial I’ve a real what obviously now that X-year, million last deal play. market, are interest the to give in being will week, I I XX of the heard about -- light deal covenant not just

that example. so an Michael, don’t would any comments have that’s -- if other -- be know that? about And you I that

Michael Morris

terms growing, We sometimes to grow. with relationship/ what pleased don't occupied, industries owner with a Well, comes are so. the are And what of and really company. see it in like ancillary category but for that focus that business very you is we're occupied know owner

John Pancari

Okay.

Scott McLean

the so actually more loans, don’t described. but good we of we But because down, offs But exposure just problem the experienced exposure Scott. just been CRE know, is that John, term thing. at as our like are I the it's we'll of credits. large just had add the the the that the that’s have that’s a this you larger credit, have a really Also or portfolio CRE that area anticipated than term it's we described. larger big there. more do which of transactions some the remaining that credits volatile I And credit generally paying end conditions activities to is pay Harris volatile energy -- most see have

bright Commerzbank Washington the look really real is company see is about Nevada. and and slide the XO% the what about Arizona, smaller loan they’re XX Colorado, deck, you growth. year-over-year, solid growth our a in you producing represent of affiliates at XX% in in and spot If They

is really noted, type, Michael as a owner that's by growing C&I healthy collectively So and thing. loan that's And nicely. occupied

whether family to one HELOC again, portfolio it's are four growing from it's mix type Our the loans or company, a by growth energy it's And seeing from we're the business nice broadly nicely. mortgage coming particularly related so some then across of actually coming and our smaller affiliates.

John Pancari

Scott. Got help. That’s it. Thanks,

Now mean, growth because that not short you that -- here. really here, -- my given into mean, I environment the leads the competitive your changes right I’m given in up a credit get downturn change? that question. sure cycle can second I to back a of loan obviously nothing

environment the relatively expect reason strengthen to from there your we here. assume if that growth is remains loan competitive intense, can So any

Scott McLean

I think it's hard to know.

a quarter The quarter. fourth-quarter a third is quarter was us and generally good good for solid

to hard it's know. So

because transactions, guidance is loan lumpier. our the little And we lightened a I trying what of just bit we reason think say. the these to volatility just they’re think I that's in were larger that

John Pancari

favor And you. better credit Thank it. get anyway. I the we

you. thank So

Operator

you. Thank

next of of Stanley. Our from question line comes Zerbe Ken Morgan the

is line Your open

Ken Zerbe

asset should given maybe average the funds relatively paid fund that stay fair more remind first just million. moderate Thanks. down I you is. borrowed on balances in And million, Can guess, of pace in amount called the quarter, growth? terms question side, looks liability $XXX us borrowed just of you like what constant, the Great.. the like $XXX that your a

Paul Burdiss

No, is yes, Ken. this Paul,

stability mechanism deposit, that Just deposits balancing up of -- we as sheet there. that portfolio, we then of we ends up balance and the and kind think in about doing balancing the growth are use of that investment the what ends loan a overall -- growth are of being what kind as doing and with component

know what just borrowings, that you be. if number sense, it becoming market. A of makes senior So to be, of to are home kind lot in we're it bank that active note needs is more loan the going really as

quarter. past this issuance that saw You

composition see that to here last And to of so over I the what change would funding over quarter. you similar expect the time saw

Ken Zerbe

you. Got

right what question just municipal how then in of time? designs are portfolio just your Thanks. that follow-up you loan growth kind remind us big And Perfect. separately, Okay. as a is And the can over now? on

Paul Burdiss

Yes, right.

press -- of is about a can it grown actually Slide billion billion. $X.X As That's you a Page Currently our about release. $X loan see on XX portfolio municipal year-ago. from

Ken Zerbe

it. Got

Okay.

Paul Burdiss

to to in expect going we continue we to growth as business. see that invest And are

Ken Zerbe

Got Thank it. Understood. right. All you.

Operator

Thank you.

the of question Najarian comes of from next line of Our Erika Bank America.

Erika Najarian

Hi. Good for morning, other. afternoon good

Sorry about that.

owner Just think wanted in non-banks question would how from as of whether a John's we the the defensible guess, your of you us ask size line help of to aren't you follow-up real or terms where a to non-banks, what about playing, it's business -- think portfolio more or more questioning. occupied municipalities I part is the your estate portfolio?

Harris Simmons

good in significant generally I place, our -- guess relatively speaking a portion player. a have because portfolios think I banking mean, credits. pretty we a smaller we would that in corporate not big are say I I we are of

really focus occupied do we -- more generally. tend certainly other its a credits regional don't good loan And up value smaller small their Don't reasonably find there create these funds. what with million what C&I largely and are municipal them are our us. we businesses. even they’re I of for are to They municipal or place true $X and or think little can community to into etcetera. and by And competitors, is $X banks. way of of They owner municipalities pretty we where deals on, So the And kind kind -- to trying million. them think a is that really actually that's get $X of we kind portfolio for million picked tend $X to of million lenders those on online banks lot to our are midsize

James Abbott

I Day you -- sense of Investor back materials the slides do March James kind from size have is loan our that we give in portfolios. Abbott. Erika, commercial this some of of the

a of less performance, And loans see than very resource utilize, very that’s quarter C&I substantial very do out strong so X% could decline. you are was the potentially in our balance, little example did million some versus medium-sized good have we $X that and large-sized but the that quarter, growth during is loans small linked loan, over for a of while annualized larger the portfolio the stuff So portion did we that of

Erika Najarian

expectations it. the looking wondering that burden a color Got like us regards give clear right and margin We a the your with sort are you on spreads you loud on as securities side. of lower what a the investment? forward. provided sense just non-SIFI deposit And about you or follow-up could and I’m if strategy hear to on not or changes now whether going

Paul Burdiss

Yes. this Paul. is Erika,

is Deposit lot we operate much kind keeping that talked our in more. loan Loan there. into get don’t ability size too impacted of been have that to in and of the generally we need mind beta average maybe where So of sort about to that behaving, has loans a fund spreads your spreads. about conversation

the a Although composition I will see bit. portfolio little exchange the of

this or example, the for you mortgage spread at had in but real estate tighter year-ago, spread among do relative residential mortgage we than from kind spread different know today. residential the portfolio combination a of the our very we you is So commercial just looking example, two examples as maybe spread. more one if having that to And products,

the maintaining overall different spreads, a seeing So portfolio, into deal by we is of are deal while composition on basis, which pending some loan we had a generally spreads. slightly success impacting

as to the true As portfolio, investment liquidity are no it really our the size LCR. while we LCR, the that of the it's constraint to oppose is biggest our to testing stress longer subject relates

portfolio part am or a we're way to sheet. important big liquidity change not I really testing forecasting managing that the composition So because stress of investment we’re our in the continues be or a not predict balance

beta. So in use decent we've to net if I overall term prepared can as said remarks, interest my pretty a relative expectations, margin had I -- a decent the pretty

in much our As little has the our been of we’ve side you interest book -- in appendix with a that the bought back performance back the line sensitivity, to got relative asset know, in and the more particularly, modeling detail market rate. a very slide expectation. provides the And our on

many the beta thing. have for past Looking Maybe expansion reserve as continue half. and But another we expect rates. don’t of raise out as federal fed a the modest continues deposit of ahead the we again, points to year as squeeze we tightening to margin kind basis over to considering is

Erika Najarian

it. Thank you. Got

Paul Burdiss

Okay.

Operator

Thank you.

question jumps Our Usdin next of of from Ken the line Jefferies.

line Your open. is

Ken Usdin

Thanks. Good afternoon, guys.

of you Just amidst were year-over-year X% that growth peers. getting of good non-interest-bearing pricing deposit even a terms continued especially belief seeing see in in pressure, noticed you're really us so on I this, the other sorting and had actually your where can non bearings lot follow-up we -- little just the of you that, side. a and interest that incremental we come a are stable, down Thanks. from color to stability deposit give growth are where

Paul Burdiss

of book. And composition Yes. of operating very our proportion lot Ken of in. overall go been indication investment those our kind really I core organization. DDA me. experienced. and this -- the it's This migration Paul. you Day, negative, interest talked of stickiness think operating we DDA fact I been sound in but the DDA kind pleasant modeling the about deposits I that to of of will will out fact of strength rate to to base our deposits, of sticky our said, deposit so want has being high. is in an and actually if Harris the a actually than core our the of you that start if strength risk is Scott provides of But our surprise deposit that operating we’ve the about deposits and actually sort think anticipates that deposits have is terms and a very back But build that pretty that can Investor more is granular, All the nature. we for

Ken Usdin

And follow-up, Paul … as

Harris Simmons

All ahead. Go right.

Scott McLean

of but for of we're deposits, smaller would XX deposits some -- of bearing an interest favorable And point to just company and sitting margins operating our basis , relationship This of to get that of They is almost as fluctuation it's peers industry-leading of XX Today that. XX%. extra on points totally is I in of even s was, balances bearing these just add to that operating Scott. -- to to total low but our decades XXs, account. reinforces add described, just non-interest and generally the Paul would are how are I which XX% most maybe to these what was XXs, mid had they’re and generally reason About before to our focused enhance percent businesses, high to XXXX very ratio there. day several total the gross for out that our are XX% decades, their these which at opposed are kind mar has suggest I the profit the non-interest been to deposits XX% smaller they’re products, businesses -- company

Ken Usdin

Makes of bank there Thanks, the that's But the much side follow-up big is also Scott what that. part growing, so just to the is a the into you of Thanks. comes talk for growing you it deposit detail corporate focus guys. it lot these about versus side to is been sense. of of and as guys. consumer the is, a been not Can because consumer a stickiness it when of the for you are bank

Paul Burdiss

so -- it's non been a commercial mostly they’re it's personnel, Yes, deposits.

Ken Usdin

got Okay, it.

to feeds it Thanks lot. Scott's a So point.

Scott McLean

Right.

Operator

Thank you.

from of Our JP Morgan. Steven the next comes question of line Alexopoulos

line Your open. is

Steven Alexopoulos

Hey, everybody. Paul Want Paul, for start, to -- expenses. at

Do talked X% at the previously sustainable You the going to think about. end that’s that forward? of did you be seem to running range low X% you

Harris Simmons

change, creating of I’m proud investing business. if the really been composition we're Look -- the that we has of we and have business. opportunities really are to investing come the in our you will, kind in and the that organization are way And together really

money saving investing are and spots. in in other we're we So money spot

beyond, the ahead kind middle As in we are look XXXX right just of budgeting and we and process. our of

We on focused control, positive focused leverage. expense are operating are on very we very

yes, absolutely I sustainable. And its near-term in think so, the

Steven Alexopoulos

one great. then for other just Okay, And one Harris.

you're with targets appetite, we an Do obviously of as CCAR. now you have Zions board to to quickly? valuation the the get Chairman and that buybacks accelerate out of more and of officially the stock Given here the board, the you're

Harris Simmons

I rather. of Yes, I’m XX vote -- one do. or out

to lining is to one but of clearly to don’t the that capital am I So lot mean valuation again, conversation, I the about. these seeing I a run I think want of front in it's market what think is stock days things we with. -- -- to It's got silver need a I that deal fact we’ve

So I I about. am tell thinking

Steven Alexopoulos

the great. Okay, Thanks for color.

Operator

you. Thank

Our Demba the SunTrust. line next of question comes Jennifer of from

is open. Your line

Jennifer Demba

Thank me? you you. Can hear

Harris Simmons

Jennifer. Hi, Yes.

Jennifer Demba

of can are to wondering and saw right the that lending you you just the downturn? and Harris, competition of kind compare about last if level seeing what we talk Hi. contrast before

Harris Simmons

know to liquidity driven lot credit. was lot clearly Well, there's still a earning of I a demand assets. think it's last out competitive for of for downturn. very I of -- how it the think I lot cash don’t to before of there, developer whole lot and mean, of housing quite a a more kind compare that I

industry. of that, so think And quite there's I -- not actually around think and only generally the but I we here, discipline a lot today around see

and kind funds of I using that in of competitive where where but big you there's others are players of play probably not some respect, pop funds fundamentally of in different, in from loan hedge should is concern up. next maybe of I pressure you a a but seeing we leverage it's terms So are could the of been much there, that clearly lending, growth, see lot so be and lot quite think it's lot think problems -- a

Ed Schreiber

Ed that is I exemplified oil you has a seen are fan with to Harris' Schreiber. importantly but more really here we’ve we at book that cycle, Michael on Credit really when company a credit through the of more but and the what years, look last look and simplified, big we've staff, Morris, importantly positive been some his really our few through at done gas comments, positioning outlier next sheet Officer over wanted the the supplement and Chief the balance the the side, designed you've about as a cycle. program This

next that look the through this shape we forecast cycle. we'd you quality any at looking So we in if and a be and is outlier asset are Company position at from the a an way good perspective -- positive I really think

Jennifer Demba

Thank you very much.

Operator

you. Thank

question comes from of Our next Geoffrey Elliott line Autonomous the Research. of

Your line is open.

Geoffrey Elliott

question. the taking for you Thank Hello.

First, just little clarification. a

us think expect touched corporate quantify excuse prepared the that? I prepared you expenses. the simplification of structure me, remarks in from what of you Can the in How do on remind impact remarks the -- benefit on you that? the you the is

Paul Burdiss

was the prepared at -- level in the what of at all say all happened have services that is quantify expect run last you maybe this say the not operations but specifically a we’ve company. was the the course Paul. and seen Keep would the a over assets did I that a of the key that of deal holding that be didn't time. to That the been I of some essentially key have kind I elevation and line near-term -- I of Yes, bank to we effectively with part didn't or escalation of that we'd I specifically lot it. the what rate professional it, Nearly little think of describing. and remarks, bit are did some the in mind for lower. quantify kind Geoff, the employees that all

is step my So while operating of expectation that would kind our change it see in wise not organizational of does create kind expenses. a simplification, we

Geoffrey Elliott

And giving is you're adjust competition the are kind How compare main in then brands separate geographies. different on in banks, markets of in the much pricing guess you’re unusual somewhat you separate in and flexibility seeing how to in? like, much and operating deposit you side, markets I you variation if different if you that

Harris Simmons

to make they made But so management locally. local about and price the both are to incentives say have large to funds to teams of costs. don’t for sheet. have it. on they're that -- the sides what about by funding more We raising we know and probably we’ve trying the pricing internal pricing Well, their try -- could larger spread every them -- I minimize decisions certainly I as compensate deposits would bank they’re transfer balance

Paul Burdiss

local the opposed Yes, to local to banks ascribe as of value -- If I Paul. of the nature of is the more brand I would the this I sort banks. probably could, would

autonomy we a very, around the was the what I the of think being about question the of pricing. brand, and local way as very us to deposit really level, a around react local for in specifically able lot is flexibility the groups are I think run needs but we providing Your the really thinking at client is to value

Geoffrey Elliott

Thanks much. very Great.

Paul Burdiss

Yes.

Operator

you. Thank

comes from question next of Spahr Our Wells the of line Fargo. Christopher

Your open. is line

Christopher Spahr

you Thanks the question. ratio the think go? With efficiency taking for single-digit can PPNR, how do low high

Harris Simmons

I don’t a game limbo. of like know, it sounds

Paul Burdiss

that. just start out in will I

Harris Simmons

[indiscernible]. Scott

Paul Burdiss

are said sort of that really I focused goal. not we ratio As as efficiency -- the end necessarily on the

and efficiency focused We we to operating going achieve very ratio to growth PPNR And grind strong to really if we’re see are to that lower. that, can continue continue on continue leverage. positive

Harris Simmons

form kind are be but shown loan we that deposit would getting talked just ourselves of that here drag, my I performance -- down aspiration. would make different one shows up little some you and hope think seeing of that of a in next lot nevertheless observation, in peers to kind of and now. kind years, because and are than be a a -- we'd find the deposit we’ve you of bit the it mid expensive over the of our of generally so find XXs that is creates the probably about mix hope my and is we little it we the more into the a -- couple kind I little in But the would base operate that right of

Scott McLean

I is -- actively the investing we’re around actively that trajectory rate that, the to to involves that that investing and would technology. about trying we in that talked going Steven's and mean, are add we’ve in expense businesses basically to growth that I grow expense our I this X%, of X%, plan about building Scott, back just questions

future bankers etcetera, heavily the to just technology last back investing years, in we with are in in not cutting the everywhere businesses or three etcetera. not so and hiring over are of been And and grow sitting of both the We’ve terms investing trying new in we four terms future. costs

Christopher Spahr

you. Thank

Operator

Thank you.

Riley question comes of Moss line FBR. B. of Steve the next from Our

line Your is open.

Steve Moss

Good afternoon.

categories, resi for on what are loan front particular days? on thoughts wondering and oil these forward you with also retaining also growth regard are the in just going with growth mortgages and On both resi to your what those and gas,

Scott McLean

Yes, I …

Paul Burdiss

Scott. ahead, Go

Scott McLean

mortgage Go going find I is would to country. ahead, business you than lenders the major at our business different mortgage the was very Well, say, the just Paul. mortgage in

I buyers. private it Our our business also, first -- owners, and business a think business generally small do about XX% time although banking they're basically owners, is are of consumer we and not basically broad -- have business, but business a small going is mortgages home very for to they're our be

mortgage year, paper like a our every is rest bit read volume So down the about little not nearly you but the in that last versus the of this industry year day.

So about everything And about pretty basically to XX us. we are are we we XX%, XX% going what introduce mortgage game we are Paul, it's process of to think think years. application bullish about, changer is I for be real that we originate, on retaining under our online a retained digital a and we new business

it's pilot $X $X.X that’s now, We It went year. was about right us. that down player, in are book, the a in rolling be game billion now. for about a contraction. got big And but energy not on $X billion, the And outstandings out next billion billion, from right will to changer to $X

XX% I our reserve -- that think basically in And business. Just contracted we There's be at back consciously grown have in held lending would area. the coming It's billion. in about growth not services base and last of And growth to all. back we’ve couple from of midstream. kind portfolio quarters that virtually unusual no to it's $X.X XX%

Steve Moss

to on basis, flat. helpful. regard then, they're balances I with That's EOP Okay. securities And know here,

your Just wondering those forward. what for are balances going expectations

Paul Burdiss

and may size. composition, change flows stable, ebbs not I the and But This in size growth is that flows. loan relatively ebbs Paul. as expect its portfolio expecting a overall and or speaking I remain to the change generally big am that although deposit growth

Steve Moss

All right, very much. thank you

Paul Burdiss

Thank you.

Operator

Thank you.

Marty of line Vining the from Mosby comes question next of Our Sparks.

is open. Your line

Marty Mosby

pretty the of outstanding precipitously of some was some causing kind questions. Thanks. was this the that dropped up. stock of impact? warrants of were count is I the share reversing were three quick price that have the as benefit that going quarter, The One out some of dilution

Harris Simmons

quarter if Some up don't of though it you this know maybe and I a even different. that -- the think went went lot quarter-over-quarter, average I is price down, whole at look average share

think you activity. a there's of the positive are -- lot the I repurchase share of result seeing impact the there

Paul Burdiss

does a that shares. I the the difference price million shares is, the you see stays it substantial in about if what Marty, it on think but but the all improvement X.X we read, obviously will quarter it it's to fourth in will more stock where quarter, here, be have is diluted

Marty Mosby

done you were down without and FDIC are about had was kind Okay. of Could be some kind surcharge it you debt, just just forward? rolls And away. as of that because the do costs was maybe hearing next FDIC of expect that then, this you going maybe going the kind just consolidated go I you've costs your quarter, to Paul, and what talking number, explain to quarter, the and what that you it

Paul Burdiss

sort third isolated FDIC that it of it's a the but term, use as shows a, kind right. of was I in accrual part this couple again quarter. are it wasn't as through but could I to we of one if you is happen of quarter, of things been it's the articulated, thing, incremental not that prepared million impacting key can event, Marty. next went going Yes, $X.X up probably had quarter. this the remarks, of have The one-time There I are I sort

debt issued a and by is we unsecured company aspect have the quarter other had notes bit little now bank. been was that in holding The then assumed we the that debt third of

So treatment the as it very you debt, know a under calculator. FDIC unsecured favorable favorable -- gets

also going that’s that million be and incremental probably a to to of And $X to benefit so a quarter. going be there's an close

of the else. is affects $X is that that surcharge will affect surcharge, million The And it FDIC little just course us other big quarter. for under a everyone reminder, one as us as FDIC a a

Marty Mosby

and quick in it's kind and XX, gas, one is, page declining, decline, still tough excluding portfolio the last a oil back C&I, building is the to on so then biggest the Amegy. is modest of out coming your without see And Almost seeing decline. it's of of Perfect. momentum portfolio all question that

because decisioning big it looks past a type but I or consistent was was several the number loan it what the quarter, was the it quarters. in So was just actually been it's over this curious around like

was So decline. causing that just curious what

Paul Burdiss

will So to else whoever a will comment. start and about Michael I would owner I also want then make and Scott Marty, ask and thinking in I occupied when include that. C&I,

as know, you but estate occupied -- owner you happens important C&I course of had aspect. real commercial owner really commercial estate, actually last It sort over it's the a think commercial there a because as been if and secured of loan, loan occupied, is disguised owner year. by be real a combine occupied. I it's just, to really But growth the

would you add that? of anything Scott So, or to Michael, like

Scott McLean

Amegy's would point also to I said, occupied. No. owner in would growth but would I -- just what I you echo

So owner there Paul in growth has market occupied been C&I C&I Texas the in always include and under the as umbrella we mentioned.

Michael Morris

larger add And portfolio that, the would more transactions is portfolios. to our most than of it other has is thing I exposure -- that only to that

exactly, in and -- C&I C&I place will the about definitely right. see the so space it in is So gas, volatility, the in talked that we call, oil a non you Amegy earlier

Marty Mosby

Right. Thanks.

Paul Burdiss

you. Thank

Operator

Thank you.

line comes next the question Don with of Koch Our Koch Investments. from

Your line is open.

Donald Koch

guys. you, thank Hey,

less total bank yet and Directors slides these family to than come do statements [ph]. is finding why the of there's working the of flexed mean main Synovus it's Barnet did these ought fall to a third stock and old mean all outstanding sort Regions well quarters the Day sort I of you the had when a bang in quarter. that and but of I for you I just Investor sort an several Just historically kind know those filled. little looking salary mechanism banks out. of individual the am from be Are to so some quarter. So, and you your consolidations quarter? I your it bank outstanding, your versus the can did takes am sort up one I UCBI, at like out. and back bank make And of really about you assets.

Harris Simmons

You broke last the phrase there. up in

Donald Koch

your that? bet mean, that stocks ROA the gone would Do downward were knocking And have I such did phenomenal quarter the currently numbers. up you but tremendous I pressure, last why be if a I on off this the to there's in consolidation. pressure have have -- the are stock ROE, the betting from stock man, any from would and you explanation

Harris Simmons

don’t I would manage it's if from it to the tough bank I Well, consolidation. enough say without manage the a market. was know to having

Donald Koch

understand. individual no but put I you fallout that seeing and it's are guess, Right. that banks the together? I any individual were No, know from a these part of you all

Harris Simmons

given mean, mean, people very fundamentally we We on is, mean of been get the I listen, kind well. very any But picked No, I got we’ve management the the people has -- up think we have stable enough in sometimes got answer I -- had, ranks off I employees as by stable. other of day. the no. pick company been others, there's we

Donald Koch

and way the the the And same incentives are same? so they’re paid

Harris Simmons

of -- CEOs. Yes, this fundamentally, fundamentally the in of been of hasn't them, lot the report a not most but these all market them there facing customer employees local almost front totally, to change all All there. Company

Donald Koch

Right.

Harris Simmons

group CEOs. stable. that these call been And affiliate extremely What we has

think you we not through a deal this. don't customer The that’s issues was I -- just So, going seen haven't see the facing people. of kinds for huge that consolidation the

pretty to in about that, had places tried but office it revenue impact the some functions, be like some kind those. we careful back of certainly Now drivers,

James Abbott

said In many just will jump left. employees got their times of I'd lives helping in to just a feedback that And we're appearances, is Harris, conference here. this this one getting consolidate the we to in fact I simpler. -- because couple frontline the the of minutes from you've made James, say, decision We’ve

-- let's our time, last be take questions of take looks able then we going everybody's questions to lightening will because and we to like it be around time limit. and these will are but just we go just Let's not make at for two and two more

Operator

Thank you.

question of comes line the next of Our Capital Markets. BMO Lana Chan from

Your line is open.

Lana Chan

Hi. Good afternoon.

appetite return loan for follow-up or bank whole about a business on acquisitions discussion. the your Just portfolios whether or capital you talk Could lines?

Harris Simmons

some say that something not we've think not we never. strategic it said I Well, is a any time, never for priority sense. It's of

time spend about. will that lot thinking We not great fit. of a a I something be was But we guess, it's if something opportunistic,

James Abbott

Lana. Thanks,

Operator

Thank you.

of Brock Our Vandervliet next UBS. question comes from

is line Your open.

Brock Vandervliet

Thanks of much, saves I efficiency had doesn't ratio, like XXs, for Harris, guess, the seem necessarily I mention in it I jump very off that you a you mid be I while. heard XX thought would in feeling or top terms regulatory of about improvement better consolidation situation? on driven. near-term scope anyway back of vis-à-vis line your Are the the charter here your or some expense the of for

Harris Simmons

that's healthy, few I when just XXs, next used kind and that continues think kind I think talk that about will loan revenue with to to suggesting growth. mid -- that’s the of I and reasonable we not achievable I I think with growth model But I aspirational -- Well, word am see I quarters. do reasonably do by driven the going -- of continue the economy business remain happen our think to if in that’s that that

think we about larger in franchise we of the as run what of is. this competitive on I the But major our worry part deals little fundamentally a not short pressures mentioned. some that's

goal. as over I think to not sweet time kind is, think it's And think our focus so of unreasonable I I what on spot an continue we

Brock Vandervliet

Appreciate you. the color. Thank

James Abbott

Okay.

have thank me James My -- for to Please call of hesitate I of industry press conferences you today. at joining thank think questions the many We additional hosting look if question-and-answer Latif -- during release. Thank you session. you wish good appreciate all you this Abbott. the is seeing the you contact don’t the or balance we comments. We of year. is forward a participation the your evening. on information the front you to again And and for for

Operator

your wonderful this Thank conference. gentlemen, and day. participation today’s for you concludes and a have Ladies

Zions Bancorporation, National Association (ZION) 23 Oct 182018 Q3 Earnings call transcript